Even as the pharmaceutical sector in India is gaining lead in the global pharmaceutical market, one of its segments is on the verge of disappearing, because of the heavy setbacks received in past few years. It is Indian penicillin-G manufacturing industry, which bears the brunt of medium scale pharma companies' penchant for low-priced Chinese-made penicillin-G.
As against 5 manufacturers of Pen-G, today only 2 companies - Tamil Nadu - based SPIC and Ahmedabad - based Alembic - are manufacturing Pen-G. Others including HMGB, JK Pharmachem and Torrent have suspended manufacturing. In the aftermath, the production per month has come down by 73 per cent to 200 MMU from 725 MMU.
There are a large number of medium scale Indian companies, who regularly import Pen-G from China for the manufacture of ampicillin, amoxycillin and cloxacillin for exporting to unregulated markets of Africa and South East Asia. The lower Chinese Pen G price has benefited these Indian players.
Earlier, Penicillin G was in the negative list and invited anti dumping duty from the Union Government. However, intense lobbying from these mid-sized players has caused the government to lift anti-dumping duty on penicillin, benefiting Chinese companies, sources told Pharmabiz.
S K Sagar, president of Indian Penicillin-G Manufacturers Association (IPMA) says, "In spite of steep reduction in production, the demand for domestic Pen-G seems to be insignificant and due to this, the stocks with the manufacturers are piling up. Therefore, it also goes to say that the total domestic demand is also being met by imports from China."
He points out the reasons behind the rising increase in imports from China - while the technology / productivity is almost same between Indian and Chinese manufacturers, Indian manufacturers have the disadvantage of paying 3 times the price for power which is one of the key inputs for Pen-Gfermentation. In addition finance costs for Indian companies is also very high, almost 3 - 4 % more than that of Chinese companies, he opines.
"The prices of sugar have gone up from last year's price of Rs 13/Kg to the current level of Rs 18/Kg., and the fuel oil prices continue to be high. These increases in prices of vital inputs should have reflected in an increase of atleast Rs 25-30/BU, but on the other hand there is a decline," he added.